THE FREE MARKET....I didn't really mean to spend an entire
fortnight posting about income inequality, but it ended up taking on a
life of its own after the first post,
and I'm glad it did since it led to some interesting conversations. In
any case, I think I'm done for the time being, and I'd like to finish
up with one final post.

Several of the criticisms — especially of this post — were along the lines of "Perhaps Kevin doesn't realize that there's a reason certain people do better than others. It's called the free market."

Indeed I do realize that, and that's really the whole point of all my
posts. The problem is that while market-based economies are terrific
at a wide range of allocation problems, free market capitalism isn't a
law of nature or a command from God. It's an invention of human beings,
and like any human tool there are places where it works well and places
where it doesn't. Roughly speaking, there are two areas where I think
government intervention in free markets is justified:

Interventions that are designed to make capitalism work better.
Example: capitalist economies work their magic via competition, but
classical economists have recognized for over a century that laissez
faire capitalism frequently leads to monopolies, which in turn destroys
laissez faire capitalism. The answer is antitrust legislation, which is
designed not so much to rein in free markets as to allow them to
flourish. Securities regulation, which is generally designed to promote
transparency and a freer flow of information, is another example.

Interventions designed to correct things that capitalism does poorly.
Example: brutally exploitive child labor is a normal and predictable
consequence of industrial capitalism. However, when it eventually
became socially unacceptable it took government intervention to end it.
A modern day example is minimum wage laws. A free market will
inevitably price the least skilled labor at (more or less) subsistence
levels, but today we have a social consensus that if you want to employ
someone, there's a certain minimum amount you should be required to pay.

Bottom line: I am a considerable fan of free market
capitalism and generally think of it as the default mechanism for making
economic decisions. However, while I'm also a fan of the scientific
method, that doesn't mean I think it's the right tool to decide every
single question of the workings of the world.

Likewise, capitalism isn't the right tool to decide every single
question of resource allocation and human interaction. As a democratic
society, we can decide for ourselves what our priorities are, and if
unregulated capitalism doesn't meet our needs, we should feel free to
intervene. The important thing is to understand the costs and
limitations of interfering with free markets, to treat our ignorance
with respect, and to be willing to change our minds based on changing
evidence. Free markets work wonderfully well in a wide variety of
cases, and we should be skeptical about our ability to improve on them — but not petrified into inaction.

This is why economics (and economic history) is important. Not
because it teaches us to worship at the altar of the marketplace, but
because it helps teach us what the marketplace can do, how and when it
can be safely interfered with, and what the costs and benefits of
interventions are likely to be. As long as we interfere with our eyes
open and maintain a healthy respect for the dangers of unintended
consequences, there is no reason we must — or should — accept the
results of the marketplace as gospel.

Nice post, Kevin. It's especially important to realize that
capitalism is, in fact, a human tool, and modern capitalism simply
wouldn't exist without government (at a minimum, a government is needed
to enforce a modern property system).

The issue really comes down to what sort of society most of us want,
and what, if anything, needs to be done to ensure our economic system
delivers.

This debate touches more than a little bit on libertarian notions of
society. An invaluable resource for such ideas is Mike Huben's Critiques of Libertarianism.

Jonathan

"A properly functioning free market system does not spring
spontaneously from society's soil as crabgrass springs from suburban
lawns. Rather, it is a complex creation of laws and mores... Capitalism
is a government program." George Will, This Week with Sam Donaldson, Jan. 13, 2002

Sounds reasonable to me. Of course, the trick is knowing when to stop.

Sometimes regulations outlive their time. I sometimes wonder if laws
and regulations should be required to sunset after, say 20 years, so
that they can be looked at again in the light of the present time.

Sometimes regulations outlive their time. I sometimes
wonder if laws and regulations should be required to sunset after, say
20 years, so that they can be looked at again in the light of the
present time.

The problem with that is there are always people for whom the sole
concern is making more money, regardless if the methods are socially
unacceptable, unethical, etc.

My concern with sunset clauses is a few wealthy campaign contributors
coupled with a few unethical politicians could do some real damage to
something important to everybody like the 40-hour work week.
Yes, we could vote them all out the next term, but sometimes that isn't
good enough. There will always be robber barrons who are willing to
consider human beings as another natural resource to be exploited (and,
no, I'm not naming anybody in particular here).

Of course, my personal opinion is that we should be working 36 hours a
week - four nines, with three days off. I'd be willing to bet it would
lead to a more productive workforce, and in some cases would lead to
more jobs (shift factories and the like).

I agree with you Kevin. Free markets are great, when they are not
interfered with by the state and monopoly power. Unfortunately, our
system of state capitalism interferes with free markets consistently, in
favor of our own corporations, and you rarely hear this criticism
coming from the libertarian free market crowd.

You also rarely hear them champion free markets in other areas of
life, for instance politics. Our two-party system distorts the free
market of politics, doesn't allow individuals like Ralph Nader to
debate, and ends up with a system that so many people despise, or feel
helpless in, that the voting record is atrocious.

Free markets of ideas and opinions also is essential, and there are a
number of forces working against these, and again libertarians rarely
acknowledge them, as the majority of them come from the Right side of
the spectrum.

I like your analysis of free markets. It underscores exactly what
we've been saying about the FCC decision on media. You defended the
decision as needed for a freer market, but you haven't really made a
good case that this will actually allow the market to work better, which
by all accounts seem to be working fabulously, with media at
unprecedented levels of evolution and growth.

The FCC decision was not necessary, and was done against the wishes
of both Congress and the American people, and without proper and engaged
public consideration and debate. I honestly can't believe that you
would defend such a possibly momentous action by a regulatory agency
staffed by partisan appointees, and who decided against their mandate
given by Congress to act in the "public interest", in regards to the
"public airwaves" (or commons), in favor of siding with the "corporate
interest", and an overall argument that denies the commons nature of
several forms of media.

I'd like to hear your response to this Kevin. I'm still greatly
confused, as many were who responded to your FCC post, how you justify
the FCC making this action without engaged and vigorous public
consideration, and seemingly against their charge and mandate given them
by Congress.

The free market paid Greg Ostertag 39 million over 6 years, Jim
McIlvaine 33.6 million over 7 years, Shawn Bradley 30 million over 7
years, and the absolute worst, Bryant Reeves 65 million over 6 years. If
we can't trust savvy NBA executives with their ridiculous contract
extensions for white centers, then my faith in the free market for
children's health insurance and pharmaceutical drugs will remain
irrevocably shaken.

This discussion also brings up interesting ideas about differences
between liberals and libertarians/conservatives on the idea of freedom.
I generally think that most liberals look for a positive freedom, i.e.,
the freedom to do, in the free market. They want to be able and have
others be able to participate in a market where people aren't lying,
cheating, stealing, or otherwise exploiting others--all of which
requires a regulatory body. On the other hand, conservatives/libertarian
seem to regard freedom as negative, that is, freedom from regulation.
Ideally, I suppose, "freedom from" should be the same as "freedom to,"
but so often unfortunately this is not the case.

The FCC decision was not necessary, and was done against the
wishes of both Congress and the American people, and without proper and
engaged public consideration and debate.

As you may or may not know, I work on the Hill (albeit not in any
kind of legislative capacity, I make web pages). I was speaking to an
aide of a Congressman (who shall remain nameless) today, and I was told
they're confident they have the votes to overrule the FCC decision in
both houses.

"Free markets of ideas and opinions also is essential, and there are a
number of forces working against these, and again libertarians rarely
acknowledge them, as the majority of them come from the Right side of
the spectrum "

Err... how do you figure this exactly ? Any data to back that up ?

Last I checked the advocates of speech codes, " free speech zones "
that restrict free speech to some out of the way nook, the legal theory
that speech equals action, and that free speech itself doesn't exist
comes from the Left, specifically the academic Left and the Critical
theorists in particular. There are religious right censors aplenty who
scour junior high school books for swear words but of the two groups who
is more effective in actually getting laws and rules passed restricting
free expression ? ( The two sides also join forces on occasions,
usually to pass " anti-pornography " laws. You can find Andrea Dworkin
and Jerry Falwell in the same bed, at least politically speaking)

Secondly, libertarian and civil libertarian groups from the ACLU to
FIRE are active in taking would be censors to court. In the media I see
public figures like Nat Hentoff, Nadine Strossen, Tammy Bruce, Stephen
Chapman, John Leo and others frequently spotlighting attempts at
censorship.

I find it truly remarkable that, in the year 2003, so many (if not
all) conservatives and libertarians regard the chimerical "free market"
as this wondrous, endlessly benefic creation that must be left in
its pure, virginal state, lest we begin the long, hellish descent into
(gasp!) socialism. For these starry-eyed idealists, it's as if the last 100 years of American history never happened. Anyway, I strongly recommend Social Darwinism in American Thought
by the immortal Richard Hofstadter for anyone interested in the notable
similarities between the long-discredited late 19th century "Social
Darwinists" such as Herbert Spencer and William Graham Sumner, and
today's Hayek-totin' "market fundamentalists." The more things change...

Actually, the most free-market libertarian types I know believe
rather strongly in *corporate* regulation, because large corporations
interfere with the free market, which in its pure virginal form is made
up of individuals. By defining corporations as "individuals" the system
becomes skewed in their favor, as, of course, they don't face individual
consequences in the same way. In fact, the whole point is to protect
the individuals who own the corporations.

I find that I can find a lot of common ground with libertarians.
They're a very different group than those who seem to believe GOP stands
for "God's Own Party" and just agree with whatever drivel comes down
from the leadership.

Magenta, where are these libertarians, because I never hear from
them. Most libertarians I come across these days are radical Ayn Rand
types, and accept any state interference as anathema. This
reactionaryism is practically a religion. And Cato rarely takes this
line. There is a current creepy form of corporate laissez-faire
libertarianism that is going around, and at the very least they are
drowning out the voices of more reasonable and realistic libertarians,
who are not absolutist.

Last I checked the advocates of speech codes, " free speech zones "
that restrict free speech to some out of the way nook, the legal theory
that speech equals action, and that free speech itself doesn't exist
comes from the Left, specifically the academic Left and the Critical
theorists in particular. There are religious right censors aplenty who
scour junior high school books for swear words but of the two groups who
is more effective in actually getting laws and rules passed restricting
free expression ? ( The two sides also join forces on occasions,
usually to pass " anti-pornography " laws. You can find Andrea Dworkin
and Jerry Falwell in the same bed, at least politically speaking)

Mark, my use of the term "majority on the Right" was meant as an
acknowledgment that there are currents that fight free markets of ideas
and opinions on the Left too, but in an overall sense, and far more than
in a legal sense, a majority of this comes from the Right.

I believe you overstate greatly the stances and opinions of the
academic Left and critical theorist, and overestimate their impact.
Yes, in some notable cases they are terrible at allowing for opinions
opposed to their own, but this is much more common among today's right
wing then the Left.

I am also talking about more than freedom of speech, which is only
one component of a free market of thought, information and expression. I
am speaking in more of a philosophical sense, and not in a legalistic
sense.

I have noticed that the Left is moving towards the Right on this
though, as they feel victimized by the Right's successful use of a
closed market in thought and opinion, backed by huge dollar
contributions, in pulling the political climate to the Right.

The Left is beginning to call for adopting the same tactics as the
Right, and this is to be decried, as Al Franken makes so clear. The
bottom-line though is that in many ways I see myself as a realistic
libertarian, one not far from the views of classical liberalism, and
feel there are a bunch of fradulent libertarians out there who want to
remove restrictions that don't work in their favor, and look the other
way from those restrictions that do work in their self-interest.

Regardless, I still want to hear from Kevin Drumm about his support
of undemocratic and against-the -will-of-the-American-people decision
making by regulatory bodies manned by appointed bureaucrats that effect
all of us.

Is it reasonable to think that a "free market" has never existed? I
certainly don't see it. And at some point, you have to realize, that
today's capital is a result of the blood and sweat of others. I think
the problem with these debates is how they are framed...you have to
assume certainties before you can enter them. I just don't see it.

Freelixer: My FCC post was only on the merits of the proposal itself.
I agree that they should have held public hearings, and if it really
is opposed by Congress, then Congress can pass a new law overturning the
decision.

Basically, it comes down to the real world. I really do believe in
deregulation unless there's a good reason for the regulation, and I'm
just not convinced that the regulations in place right now are all that
necessary. The loss of small personal businesses is something that's
happened all across the economy, not just in the media, and I really do
think that there's enough competition and diversity within the media
without lots of regulation.

Furthermore, and this is important, I think there's a sort of rosy
view of the good ol' days of the media that never really existed. The
major media has always been owned by big corporations, so I'm not sure
the modern media world is quite as different (and dangerous) as people
are making it out to be.

and if it really is opposed by Congress, then Congress can pass a new law overturning the decision.

Looks like the aide I spoke to today leaked to the local news, too;
they're now reporting impending legislation to overrule the FCC
decision. Now, there's no doubt about having support in the Senate
(Trent Lott, just to name one, was against this, the Senate will
probably vote 2-to-1 on this), but I'm unsure if they can make it
through the House; the house tends to be more populated by lunatics (on
either side of the aisle).

Kevin also wrote:

Furthermore, and this is important, I think there's a sort
of rosy view of the good ol' days of the media that never really
existed.

I came upon this conclusion myself this evening, when the Don Henley song Dirty Laundry
came on the radio. I mean, if Henley was talking about how bad the
media was in the early 80s (an era when I wasn't really paying attention
to the evening news, being in kindergarten) then has it gotten that much worse?

I'm not fond of the right-wing wurlitzer, of course. But it's hard to
say if this is going to play out as bad as some people are suggesting.
My opposition to it is primarily on the local programming front. Back
when I was in high school, there was a lot of fantastic radio, even in
east-central Pennsylvania. Now, there's little local programming and
obviously standardized playlists, even on formats like classic rock.
It's gotten bad enough (in my opinion) that I don't listen to commercial
radio anymore. I'm wondering if my television viewing (which is already
limited) is going to be restricted to PBS in the near future.

Ok, the "CEO Administration" is about to simplify and streamline the
telecommunications business the same way other CEOs insisted it needed
to be done in '96...leading to a hype stampede, overbuilding bubble and
massive fraud which we're still trapped under....

...the same way other CEOs said the finance/insurance/investments
business needed to streamlined in--whoops, forgot what year--to
"unfetter markets and open financial market accesiibility" ...leading to
an etrade, ameritrade, schwab, merrill hype stampede, more massive
fraud and a market bubble which our 401k's are still trapped under...

...the same way other CEOs said the S&L business needed to be
freed up and modernized in the 80s...leading to a taxpayer bailout, yet
mo' fraud--Hi, Neil Bush!--in the untold billions[trillions?]

...the same way other CEOs of [insert pharma, energy, healthcare, airlines, agribusiness or sector of your choice here]...

What do I feel after all this? Mostly empathy.

With the cadavers in a first-year anatomy class at a 5th-tier medical school.

One thing to understand, the market, as a force doesn't exist. When
economists talk about 'the market' the are talking about an economic
state where millions of independent actors can make there own decisions
about personal valuation of scarce resources as signaled by price. The
reason that 'the market' tends to be more efficient than government
control is because the millions of different economic actors know the
millions of different details that effect their decisions far more
intimately than the government. It is all about knowledge, and usually
the people in the market have more knowledge than the government could
ever gather and analyze.

So, in response to the FCC question, I don't think that the
government has to justify removing regulatory control. The default
understanding is that 'the market' will know better than the government.
In my mind the burden of proof should be on the government regulator
to show that both a) has been a market failure AND b) that the
government is likely to correct that failure with introducing all sorts
of other bad results into the system. I'm not against government
intervention, I'm just assuming that the government can do better than
the market.

Nice post Kevin,
I also think the concept of Public Goods (which I assume falls under the
second category) needs to be brought back to the Libertarians
attentions. For practical reasons there are a lot of goods and services
that the government has to provide (roads, military defence,
environmental conservation + protection) and notably Conservatives seem
to embrace only those that result in huge government pay outs to
corporations.
Also, the whole "privatization is always the answer" approach seems to
have been firmly refuted by California's energy crisis. Yet still they
persist!

I would argue that Clear Channel's track record of layoffs and lack
of local programming qualifies as a market failure. People would likely
go to other radio stations which carried local programming if they had
that choice (which, in plenty of markets, they don't).

b) that the government is likely to correct that failure with introducing all sorts of other bad results into the system.

here is the tricky part. I still see local programming on television
now, but it's still not that much programming.. so it's not necessarily a
perfect comparison with radio, as television starts with much less
local programming from the get-go.

the question, though, is what bad results in the system could we
possibly see? a couple of media moguls who only make two billion instead
of four?

Last I checked the advocates of speech codes, " free speech zones " that
restrict free speech to some out of the way nook, the legal theory that
speech equals action, and that free speech itself doesn't exist comes
from the Left, specifically the academic Left and the Critical theorists in particular.

Hmm...academic Left...Critical theorists...Theodor Adorno:

Perhaps a film that strictly and in all respects satisfied the
code of the Hays Office might turn out a great work of art, but not in a
world in which there is a Hays Office.

from "Monograms" in Minima Moralia

God, I love sweeping generalizations--especially pieces of paranoid anti-intellectualism that can be easily shown to be wrong.

And Bravo, Kevin, for pointing out that capitalism is not a law of
nature, but a human arrangement. We may never see the end of ideology,
but perhaps we can look forward to the end of this particular ideology.

The reason why I think that the consolidation in media markets is a
lot more serious than cosolidation in other markets is that market
failure of information is a seriously nightmarish scenario compared to
that of any other market good.

John Yuda, that is exactly the type of debate that I would love to
have on market/government issues, yet this is the first time in quite a
while when I've even seen someone attempt it.

As for the fear of market media consolidation, I would have been much
more worried if the internet were not in existance. Furthermore there
is some evidence that the market is punishing over-consolidation in
media markets. See AOL merger/spin-off talks.

Furthermore there is some evidence that the market is
punishing over-consolidation in media markets. See AOL merger/spin-off
talks.

Point granted, although it's still hard to tell where (if anywhere) the AOL situation is leading.

Speaking of the internet, though, I'm mildly worried about the
announcement by Microsoft that future versions of IE will be available
only in some OS releases and as part of MSN. I see this potentially
leading one of three different ways:

the market moving back to Mozilla/Netscape (which, in my opinion, is
already a superior product - better CSS support, PNG alpha transparency
support, among other issues that would sould like technobabble to
non-web designers).

Microsoft getting themselves into a position to deliver an awful lot
of content they control to the vast majority of internet users.
Admittedly I don't find this very likely, but MS has shown a willingness
to be.. shall we say less than honest... in the past.

Between AOL using the IE codebase for the next six years (or at
least being allowed to) and MS embedding their browser in Windows,
having the windows internet market stagnate with mediocre support for
web standards and techonology, which would lead to a world of hurt for
web designers but not necessarily be noticable to Joe Internet.

Meanwhile, back at the discussion:is local news going to be relegated
to small-run newspapers (not even the WaPo here, I'm talking Mount
Vernon Gazette type things) and public access television, or will we
stick with what we have now? I feel like it's more likely to be
somewhere in between, although I do feel comfortable predicting the end
of at least two of the six TV networks: at least one of WB or UPN will
go, but I wouldn't be all that surprised to see one of the big four die
off as well.

Whatever happened to the truly independant TV channel? I have fond memories of WPIX and WOR from New York, for instance.

Sebastian: give me some food for thought tomorrow morning.. what
sorts of negative effects of government regulation of modern, high-tech
industries do you potentially see?

I'm particularly interested in problems that exist or may have come
about in the future given a still-regulated media situation (for bonus
thought, let's pretend the FCC re-regulated radio instead of
deregulating other stuff).

I mean, if Henley was talking about how bad the media was in the
early 80s (an era when I wasn't really paying attention to the evening
news, being in kindergarten) then has it gotten that much worse?

Oh, dear. I am so old.

"Dirty Laundry" is more about the excesses of tabloid journalism than
about media consolidation. Those complaints go way back, see Five-Star Final (1931) or Ace In the Hole (1951) or Sam Fuller's tribute to the tabs of the 1880s, Park Row (1952). Or the photographs of Weegee. Or the masterpiece, Sweet Smell of Success (1957).

What never fails to astonish me is that people don't see that our
"free market" is something devised by people as a framework to work in
rather than some sort of Darwinian mechanism. And then they'll go
demanding "free markets" for products for their country when (in the
case of the US) there are monumental subsidies for farming, steel,
airlines, sugar etc etc. The EU (where I live) is probably even worse -
it was on the radio this morning that EU farming subsidies are now 311
billion GBP a year - half a TRILLION US dollars (actually just realised
that might not be a trillion if you live in the US - can't remember the
rule but in the UK a trillion is 1000 billion). Anyway, point is, the
industrialised west is free market when it wants to be.

And indeed pro-human rights / "freeing oppressed people" when it wants to be too, but that's a whooooole different debate.

Good initial post and I also appreciate something Drum said in the
thread relating back to the FCC issue - that being the comment on
looking back at the media with rose colored glasses.

I agree 100% - the FCC discussion is framed as if there were some
time when there was this amazing Golden Era of media - all diversly
owned and operated with all manner of interesting and deep programming -
and it's total crap.

The Smothers Brothers were cancelled in the good old days. The news
media pretty much followed the administration's lead at least until
reporters started getting their butts kicked by rampaging cops or
witnessing brutal insanities in Viet Nam.

I grew up in Philly - there were at least two independent stations -
UHF stations. What do I remember of them - what sort of creative,
wonderful programming? Afternoon cartoon shows - Wee Willie Winkle -
he'd play 8th Man and Astro Boy cartoons and do this bit with this
little face painted onto his chin shot with the camera upside
down..........deep stuff.

And radio - sheesh. There were maybe two interesting times in radio
in my lifetime. The late 50s early 60s era when DJs had total control
over what they played. But of course, you had the payola scandals so how
pure was that?

Then there was the early days of FM in the late 60s - "underground"
stations, where they'd play the entire Woodstock soundtrack including
the "Fish Cheer." But when you look at what those underground stations
were playing, it looks an awful lot like the playlists of the classic
rock stations we have now.

I can remember being cussed at by DJs in the early 80s for having the
nerve to call up and request some U2. (We knew it was pointless to ask
for the Ramones...) There really are many more options for music on the
radio dial than there was 25 years ago. Yeah, the stations aren't as
funky as they used to be, but a lot of music is available. Not all of
it, but a lot.

The media has always been bland and mainstream. And I don't see how this deregulation is going to make it worse.

I do believe that the financial pressures required of large
corporations will drive them to continue to offer different programming
options. And independant and underground sources of entertainment will
flourish and come to us through new channels of distribution.

Of course, my personal opinion is that we should be working 36 hours a week - four nines, with three days off.

See, this is why some people get their hackles up when regulation starts getting discussed. "We" don't want
to do any such thing -- "we" rather like working 5 8-hour days with two
days off. Especially when "we" get into the office around 8:00am and
leave around 4:30 every day.

John, you work on the Hill, so you know what commuting around here is
like. I've got an hour commute from Fairfax to Arlington every day
each way. A 9-hour workday would mean 11 hours of my day spent getting
to or being at work. No thanks; that isn't worth the extra day off for
me.

>>>"Free markets of ideas and opinions also is essential,
and there are a number of forces working against these, and again
libertarians rarely acknowledge them, as the majority of them come from
the Right side of the spectrum "

>>Err... how do you figure this exactly ? Any data to back that up ?

well we could point to all the political support by the right that
Microsoft enjoyed during the antitrust trial that was based upon nothing
more than philosophical hatred of either the Clinton Adminstration or
the antitrust laws themselves, and which were rarely (if ever) based
upon or recognized the fact that Microsoft really was a lawbreaker. I
don't think I ever read one article supporting Microsoft during the time
period of the trial that ever accepted the fact that Microsoft was a
lawbreaker. Look up any of Slade Gorton's comments on the issue, for
example.

As a democratic society, we can decide for ourselves what our
priorities are, and if unregulated capitalism doesn't meet our needs, we
should feel free to intervene.

I think this is where you get yourself in trouble with the
Liberatarians. For you democracy trumps private property rights. Its
pretty basic to American constitutionalism that there are some G-d given
rights that the democratic process can't touch, but anything else is
fair game. Libs put property rights in there with free speech and
freedom of religion as things that the people -must- keep their grubby
little paws off. You say that you are a fan of free-market capitalism,
meaning I assume that you think it usually works and your first idea at
solving any problem is FMC, but you will try something else if FMC does
not give the results you want. Would you say the same thing about Due
Process or Freedom of Religion? No, you would not, those are
foundational for you. Libs are not like you and me. The loudest of of
Libs have a basically a post-nationalist post-democratic approach, and I
don't see much possibility of meaningful dialogue between the two
sides. Given that I think the Lib position is both impractical and wrong
I usually just ignore them.

John, you work on the Hill, so you know what commuting
around here is like. I've got an hour commute from Fairfax to Arlington
every day each way.

That's why I live walking distance from a metro station, but point well taken. ;)

Yeah, you're right. I shouldn't use "we" when I really mean "I"

But what if you could do the 36 hours as 5 7.25-hour days?

A lot of government employees work a compressed work schedule, which
is 8 9 hour days and one 8 hour day every two weeks.. nets you one extra
day off. It's just a damn shame I'm not allowed to do that.

There really are many more options for music on the radio
dial than there was 25 years ago. Yeah, the stations aren't as funky as
they used to be, but a lot of music is available. Not all of it, but a
lot.

To a point this is true. At least in a major media market like here,
you can find classic rock, country, hip-hop, limp-bizkit-alternative,
modern pop, etc. The problem is, if you've got two stations which play
the same format, they play basically the same stuff. I'd love to see two
country stations, one of which plays bluegrass and old-timey stuff
with maybe some country blues thrown in, the other of which plays modern
country. The classic rock stations all play the same three Pink Floyd
songs every day.

Ultimately, my radio listening is pretty limited: I listen to one
for-profit station, a progressive station that lets DJs pick their songs
out of Annapolis - WRNR (although it only comes in if the weather is
just right) and three public stations: one for news with bluegrass on
the weekends (WAMU/NPR), one for jazz, blues, and radical talk
(WPFW/Pacifica), and one for music in a general sense (KCRW/NPR out of
Santa Monica, via the web). And, yes, I'm a member of all three.

That said, as long as people continue to support public radio
(whatever network it's on) then radio will live on. I'm hoping the FCC
changes lead to a big upswing in public radio and television donations,
but it probably won't.

Kevin, I've been noodling around with the same issues a bit, and want
to toss in a thought...I don't think that redistribitive regulation is
an 'add-on' to successful markets and market democracies, I think it's
an essential part of them. Without some limits on the concentration of power - either market or political - the system doesn't work.

John Yuda, maybe it is just because I live in California, land of the
negotiated work day, but I don't really understand why you 'aren't
allowed' to have a work schedule that you like. I have worked in law
offices for years, and all but the most green novice could negotiate a
work day/week. In my current office the secretaries work 7.25 hour
days. Some of them start as early as 7:30 a.m., and others end their
day as late as 6:00 p.m. Some take an hour lunch, some a half-hour.
Secretaries have to be there each work day for phone coverage, but that
brings us to the paralegals. They typically work 40 hour weeks, though
at least one has negotiated a 'full time' 35 hour week for reduced pay.
They work pretty much whatever hours they want, and one works on a
weekend day. One works early and late, but with a 2.5 hour lunch to
spend time with her kids. Some would work 4 days a week except that the
Cal. overtime rules make it tough to schedule like that without paying
overtime. (That would be government intervention making personal
flexibility difficult.) The attorneys work whatever hours are needed to
get their work done, and quite a few of them arrive late and leave
early, and make up the time on planes when they travel.

but I don't really understand why you 'aren't allowed' to have a work schedule that you like.

Well, my schedule is somewhat flexible, but because I provide some
phone/email support (for web design issues) as well as doing web design I
have to be here Monday through Friday during roughly business hours.
That said, some days I'm here at 8 so I can leave early, some days I get
here around 10 and stay late.

The Hays Office ??? Are you kidding me ? Could you at least find an
example more recent than from our grandfather's time ? Donna Shalala's
out there censoring college students right now and your giving me the
motion picture code from 1930.

The Hay's Office, by the way, attempted to censor parts of the film
version of The Fountainhead so they apparently had no love of Ayn Rand's
ideas either.

When I was at Penn State, they tried to force free speech zones on
us. The charge was led by our University President Graham Spanier.

But, before conservatives start congratulating themselves, you might want to know that Mr. Spanier was a conservative minister.

Now, this is just one case, but until mark safranski can show us
actual cases of this stuff put in place by liberal individuals at
universities, I'll be inclined to think most cases are similar to this
one.

The "Free Market" is a religion. Nothing less than the
libertarian utopia is at stake, where everyone is free from oppressive,
profit-stealing gubmint interference. No taxes, AT ALL! No rules, AT
ALL! The free market should police the street, ensure the food supply,
and provide for the common defense!

For example, consider the current taxless, governmentless utopia Iraq.

Or Texas.

Dissent from orthodoxy is heresy! Punishable by labels of "traitor", "Un-American", "America-hater", "Communist" and such.

One thing to understand, the market, as a force doesn't exist.
When economists talk about 'the market' the are talking about an
economic state where millions of independent actors can make there own
decisions about personal valuation of scarce resources as signaled by
price. The reason that 'the market' tends to be more efficient than
government control is because the millions of different economic actors
know the millions of different details that effect their decisions far
more intimately than the government. It is all about knowledge, and
usually the people in the market have more knowledge than the government
could ever gather and analyze.

That may be a nice definition, but that's the whole thing about
people who fete "the market" as some sort of diety, it doesn't work that
way in the real world.

I could reply with:

"Government" as a force doesn't exist. When politicos talk about 'the
government' they are talking about a beaurocratic state where millions
of independent and interdependent actors (actually, the whole of
society) can make their own decisions and valuations within and outside
the beaurocracy. The reason that 'the government' tends to be more
efficient than the market is because the millions of private citizens
know the issues that effect their communities and locales far more
intimately than those with simple market interests. It is all about
knowledge, and usually "the people", which is what government is, have
more knowledge than the few players in the market could ever gather and
analyze.

Now, we all know just because "government" is theoretically the whole of
society in a (formerly) liberal democracy, it doesn't actually work
that way.

Why are market worshipers incapable of seeing the same falacies in their own ideology?

Millions of people knowing millions of things can describe just about
anything you can attach a label to: government, "the market",
touch-typists, gays, dudes named Fred...

You say there is no force called market, yet you suggest "the market"
is more effiecient than government because it knows more than the
government could. If the market is just individuals than it would follow
that the government would always know more, wouldn't it? You present
government as some sort of large, concerted force, right? Or are you
saying the market is individuals working in concert- woudn't that be "a
force". Isn't that the definition of concerted effort, i.e., force?

How can you believe in something so strongly that you can't even seem to describe in logical or realistic terms?

Perhaps the ideology makes sense to you, but there's some disconnect when it comes to applying it to the real world?

Tim, the analogy between government knowledge and the personal
knowledge of market actors is vastly different. Lets take a very
specific, historically well understood case--farming. Government
control of farming has been attempted a huge number of times, and it is
almost invariably a failure. It is a failure, because individual
farmers know more about their individual farm plots, than the goverment
does. I'm not a farmer so I can't begin to outline all of the decisions
which must be made to make a successful farm, but they are numberous.
They include decisions which take into account such things as soil
quality (plot to plot), temperature, periodic rainfall, water quality
and access, for some crops harvest times are not easy to predict, etc.
etc...

Government control of farming has been attempted repeatedly in many countries and the result tends to be famine.

Farming is not simple, but compared to other areas of the economy, it appears simple.

Market economies send signals in concert, even though individual
actors typically do not act in concert. These signals are known as
'prices'. In the long run, prices are not set, they reflect a
combination of scarcity and desirability. As prices increase, market
actors decide how much they actually need something. As prices
increase, many market actors will seek alternative sources or
alternative products to fulfill their needs. This leads to efficiency
as only those who really need to use an item will pay a high price for
it, while those who have alternatives will seek them out depending on
price. The market knowledge which makes this process so useful is the
knowledge of specific needs which each of the millions of market actors
has. An engineer on a specific product will know whether or not a
specific component can be replaced with a specific type of material.
The government typically will not know this, it will have mandated that a
certain material be used, and will continue using that material long
after something more efficient has become available.

So it is proper for me to mention the knowledge of millions and millions of individual market actors.

No, it is not proper for you to believe that such knowledge is
equally availabe to the government outside of the 'market' process.

So it is proper for me to mention the knowledge of millions and millions of individual market actors.

My problem with this is that the market tends to value fiscal issues
above all else. One example of this is chemical companies being
resistant to increased security... I just think there's too many cases
of market players valuing their own bottom line above all else,
including public safety / long-term public good.

This debate tends to break down at two points, in my experience:

Those who favor the free market tend to believe that innovation is
unnecessarily stifled when regulation is in place (at least, this is the
most frequent anti-regulation argument I see)

Those who favor regulation tend to believe that the free market
doesn't take enough of a long-term view in protecting public safety, the
environment, and a whole host of other factors

The question then comes down to whether or not innovation is actually
stifled, and if so, how much of that is acceptable to preserve other
public interests?

The government is digital - voters get to say yes or no, 1 or 0. The
free market is analog - by spending bucks, you get to say how much you
want whatever it is you want. Government is unitary - society either
does something or doesn't. The market is divisible - individuals choose
what they do, and don't force others to go along (ignoring the old
monopoly problem, which CAN be a problem.)

Seriously, if you don't like what Clear Channel is piping into your
country radio, there is a free-market alternative for keeping them from
monopolizing the market for music - CD's. Live Music. Cassettes. MP3.
Most stations don't play interesting stuff because the folks who like
interesting stuff aren't listening to the radio, they are listening to
interesting stuff on CD.

No amount of regulation of ownership rules is going to change the
fact that the owners, whether big or small, have to play to a
lowest-common-denominator mass element to maximize the number of
listeners to maximize ad revenues. The alternative is public radio,
which is fine if you like Bach, but not so good if your tastes run to
the controversial, or college radio, which is uneven in quality and not
exactly independent itself.

This doesn't bring up the problem of the failure of the music
producers to adjust to reality vis a vis music downloading, et al. Fact
remains, a lot of this can be boiled down to "I want to hear
interesting music, and I don't want to pay for it." vs. "Selling music
in batches, with 10-15 songs per sale, all by the same artist or in the
same style was good enough in 1983, by god it is good enough for 2003 as
well!"

Sebastian is right, and you are wrong. I know my own prefernces
better than the government can because they cannot read my mind. If
this were not true we wouldn't have problems with adverse selection,
moral hazard, and the principle-agent problems (just to name some).

Sebastian's point doesn't mean the market is perfect, but it means it
is typically better than the government at allocating resources. Even a
cursory glance at the literature on using voting mechanisms as a means
of allocating resources would re-enforce such a view.

You say there is no force called market, yet you suggest "the market"
is more effiecient than government because it knows more than the
government could.

Talk about logical fallacies, have you heard of the fallacy of
composition. By the way this is not Sebastian's claim, but yours (i.e.,
a straw man fallacy). Sebastian's claim was that the actors in the
economy have information the government does not and hence can make
better decisions. Your claim is that this somehow makes the market more
knowledgable, which is not possible since the market is actually not a
distinct entity according to Sebastian.

Also, is it shocking that people with more information make better
decisions? No, ask George Akerlof, Michael Spence, and Joseph Stiglitz
(Nobel Prize winning economists for work in information economics).
Having less information results in a sub-optimal outcome...thus the
converse is....?

If the market is just individuals than it would follow that the government would always know more, wouldn't it?

Why?

1. Government is comprised ultimately of people who are limited in their ability to absorb and process information
2. Government cannot observe all the pertinent information for making
optimal decisions (i.e. does the government know exactly who is
genetically predisposed towards what diseases? No.)

Tim, that's a good point. What is a market? It's not really a
tangible thing, it's a description of an overall system where individual
agents interact, usually based on self-interest, but their motives
really could be anything, without undue interference by other agents or
ignorance.

What's been interesting in the past few years is how much Adam Smith
has a kindred spirit to some of the emergence theory coming out of
complexity studies. To advocate a free market, per se, you advocate
ultimately freedom to act as a motivated agent. Slavery would be the
ultimate violation of a free market, if not murder.

A political free market, for instance, is not far from a picture as
described by Hobbes, and with various concessions embodied in our
Constitution. The individual agents give up some sovereignty in their
self-interest, and end up with a government that works in their best
interest.

An economic free market is described in a purist sense as one free of
undue interference on individual agents acting in their interest; in
our case in America, where we have a political free market, or distorted
one, we have a tension between the political free market as constituted
and the economic free market as realized, each free market full of
disortions from the purist vision.

Ultimately, a free market is just that, individual agents free to
pursue their motivation without undue influence. This conception is not
far from our theory of political rights, and does not disallow checking
the interest of one agent who may "harm" or tread on one or a number of
other agents' interests. So we have monopoly rules for instance, to
check against an interest which may impose itself "unfairly" by an
uneven embodiment of greater power.

There is much interpretation to be made in here. The first I always
notice is actually against exceedingly powerful collectives, or power
interests, in favor of a more grass roots, individual agent orientation.
As human beings, I think we can all agree on this, unless I'm already
one of those who can "lord" over other agents. A Lord of the Flies so
to speak.

The other main interpretaion is more fine, and subtle, and is in
determining "harm" and other cases where individual agents should be
checked in order to assure the free behavior of one or a group of other
agents. Here, arguments of utilitarianism and pragmatism may come in,
in deciding on ends, or arguments against judging by ends, and the state
being "activist" in ensuring greater overall justice.

Of course, if one sees the state, at least in democratic
constitutional instances, as a free market reality itself, with
individual agents lending it legitimacy as part of their self-interest,
then it is only another level of indirection for this same meta-agent,
the state, to decide that it may be in its best self-interest, and by
extension in the self interest of all of the individual agents it
represents, to ensure greater equality, or justice, for the purposes of
protecting the very conditions of freedom, in protecting against
security problems which may arise, or future transgressions that may
arise from the inequal conditions against agents' interests.

This is where we are today, though much of the essential of the
"great debate" are skewed. Essentially, read "free market" as
"freedom", with a primary orientation towards individual agents, and
accretiating meta-agents which are formed along the way as collectives,
including that state.

This makes it very easy to see that allegiance and loyalty to America
is not to the existence of the nation-state itself as an identity, but
to our values and choices that have legitimized our great nation as our
collective embodiment of freedom.

Seriously, if you don't like what Clear Channel is
piping into your country radio, there is a free-market alternative for
keeping them from monopolizing the market for music - CD's. Live Music.
Cassettes. MP3. Most stations don't play interesting stuff because the
folks who like interesting stuff aren't listening to the radio, they are
listening to interesting stuff on CD.

How can I get local news on CD? How can I listen to high school and
college sports games on CD? How can I get local-interest talk shows on
CD? These are the things that de-regulation has destroyed, along with
playlist variation, and, ultimately, are the real loss in this system.

And he also said:

The alternative is public radio, which is fine if you
like Bach, but not so good if your tastes run to the controversial, or
college radio, which is uneven in quality and not exactly independent
itself.

While it may be true that public radio in your area only broadcasts
classical music, that's not true of all public radio and it's unfair to
shoehorn the whole system into that box.

and finally:

I want to hear interesting music, and I don't want to pay for it.

You're right - I don't want to pay for music until I've had a chance
to hear it. Not every musician comes to DC on tour, much less small
towns.

Also, I don't see any great nostalgia for older media. It's
irrelevant. The bottom-line is that we are experiencing an explosion of
media almost unimaginable a century ago. This has happened while the
current rules undone yesterday by the FCC have been in place.

So what is the reason for the FCC's action? It can't be about the
debate over whether regulation of the media should happen at all,
because that is not their mandate to act, in "economic" interest.

Their mandate to act is in the "public" interest, in regards to the
public airwaves, and thus they must justify their act, not somehow
misdirect us from their actions to the underlying debates over whether
we need media regulation.

Everyone keeps seeming to miss this. The FCC acted, and that is what
is up for review. They have harmed this nation by ignoring their
sponsors and shrugging off their mandate. For "special" interests.

Remember, the media is not broken right now. If it is, it's broken
in a monopoly way, which would not logically lead to the FCC's behavior
anyway. The same people who defended the FCC's action have been calling
bogeyman when people say there is threat of media monopoly. The FCC
defenders have been saying we have a thriving media, with many choices,
and monopoly is not a fear now, or later.

I just want to be really clear. The 'market' as a force does not
exist. The 'market' as an entity does not exist. We talk about the
'market' as shorthand for talking about a system of personal decision
making in which scarcity of resources and personal valuation of goods
interact via pricing signals.

When the market 'decides' to 'punish' a company there isn't an entity
which is decreeing that something bad has occurred. What happens is
that a company becomes reliant on an inefficient good, service, process
or material and cheaper alternatives become available. In a free
market, people will tend to abandon the inefficient company because its
prices will be higher than an efficient company.

The government does not quickly react to changes in efficiency
because it is not particularly price sensitive when it can force people
to pay for its inefficiency. Non-monopoly companies can't force you to
pay the way the government can.

You might be able to argue that the market represents a limited
'emergent intelligence' based on the individual connections and
decision-making of its component parts, but I do not make that argument,
and I am not relying on it.

Tim, I don't think you're being fair to Sebastian. He's just making
the simple point that "the market" consists in millions of people making
individual decisions. The government--while it might be nice to think
of it as "the people"--in fact consists of a relatively limited number
of actors making decisions that affect large numbers of people.

The notion that large numbers of "dumb"--by which I mean "having
limited information"--bits can act, in aggregate, more intelligently
than one or a few central "smart" bits is not unique to capitalism. The
idea pops up in slightly different forms in parallel computing,
robotics, artificial intelligence, and evolutionary theory. After all,
evolution consists in millions of tiny, accidental mutations that,
through the inexorable force of natural selection, cause a species to
stumble towards adaptation. It's often thought that a central thinker
could design, for instance, a better heart, but the point is, in
aggregate, in the long term, distributing the decision-making works out
better.

Now, this leaves open the question of whether corporations distort
markets, and so forth. I'm no libertarian and I completely agree with
Calpundit's post. But Sebastian was making a valid point--indeed, the
central and only real defense of markets, and to me, the only
explanation for their huge successes relative to planned economies--not
some esoteric religious gloss.

Sorry, Shalala caved after FIRE became involved in her university's
attempt to censor conservative opinion so technically she is no longer
censoring anyone. The problem is, she has a track record of favoring
censorship policies that goes back to her days at Wisconsin with that
university's infamous speech code.
http://www.thefire.org/pr.php?doc=um_050803.inc

Sebastian, In the UK there is a big change in the pension market
from actuarially managed defined benefit pension funds to effectively
self managed funds. The old sort used to pay a lot of attention to
mortality tables and interest rates. The vast majority of those
succeeding them will have no effective knowledge of either and won't no
whether their decisions have worked until it is too late to anything
about them. Has the knowledge applied to investment increased?

>>The problem is, she has a track record of favoring censorship
policies that goes back to her days at Wisconsin with that university's
infamous speech code.

oh I see - and here I thought that you were talking about "RIGHT NOW"
as you asserted in your post. Silly me... even sillier to assume that
the point will be retracted, I suppose in the right wing world 11 years
ago is the equivilent to "RIGHT NOW" - even when the assertion was made
in the same post where one is chiding another poster for bringing up
"dated" history - as least that poster didn't assert that the Hays
Office was operating "RIGHT NOW", did he?

The pension question is fascinating. You should realize that
actuaries work on the basis of population statistics. An individual can
and should know far more about the intimate portions of his life that
could affect how long he lives. Also, individuals tend to over-estimate
their chances of living a long life. That kind of misperception may
actually be good in a pension system.

Also, the pension market in the UK isn't going truly unregulated by a long shot so I wouldn't get too worked up over it.

I agree with Kevin's critique of the free market, but I think there
is a real danger in thinking that this is something that can simply be
"corrected". Like a piano that needs fine-tuning every once in a while.
The fact is that there are systematic tendencies towards greater and
greater inequality. Capitalism is, in one sense, a mechanism for the
concentration of wealth. There is no shortage of statistics to show
this.

Now, liberals will usually argue that this doesn't matter as long as
the income of those at the bottom is rising as well - but there is
evidence that this is not the case. That is, inequality itself is a
problem for poor people, no matter how 'wealthy' they might be. This is
why, according to noble prize winning economist, Amartya Sen, poor
African American men have a lower life expectancy than that of men who
are in pure economic turns, much poorer in China or India.

http://makeashorterlink.com/?V62C16BC4

What we need is not just top-down regulation to ensure that the
market runs like a well tuned piano - we need to empower those people at
the bottom who are continually getting the short end of the stick!

BTW, in light of my comments about the 'market' I should mention that
'restraining the market' is really shorthand for keeping people from
making the choices that they believe are in their best interest and
which they believe are based on their own understanding of the
individual factors which go into that decision.

I'm not saying that we shouldn't ever restrain the market. I'm just
saying that we need to be aware or what we are doing, and have a very
good reason for doing so.

Firstly, what I'm saying is those that worship at the "free market" altar usually imply the following:

Government is one, hierachical body and nothing more.

Government consists only of people within that hierarchical system removed from everything outside of it.

(See Steve: 1. Government is comprised ultimately of people who are limited in their ability to absorb and process information
2. Government cannot observe all the pertinent information for making
optimal decisions (i.e. does the government know exactly who is
genetically predisposed towards what diseases? No.)

And both are false, of course. There are governments all the way from
city councils and community councils to the Senate, theoretically they
are often manned by private citizens and not just career politicians,
and government is inherently more theoretically malleable than any
private enterprise (a private or public enterprise cannot pursue
anything outside of profitability as they only exist only to make money,
non-profits notwithstanding, but they're still all limited by revenue. A
government has the power of taxation to pursue whatever it is allowed
to pursue and the entire population of the nation is theoretically able
to effect it.).

That is not to say I'm advocating anything, because I'm not,
so don't bother to tell me I'm calling for state-run agriculture (a
stupid example anyway, I'll get to it later). I'm just deconstructing
the tired old argument that keeps getting passed around as common
wisdom.

Second- The "there is no market" argument is just a way to sell
lassiez-faire economics, and many of you buy into it even if you're not
government-paranoid.

He's just making the simple point that "the market" consists in
millions of people making individual decisions. The government--while it
might be nice to think of it as "the people"--in fact consists of a
relatively limited number of actors making decisions that affect large
numbers of people.

See, that's not true, that's not what he's saying. If the definition
of "the market" is simply commerce, then we're not talking about
regulation vs. no regulation vs. government run, which is more
efficient, etc. "The market", as Sebastian is selling it and as
conservatives sell it and as the term is often used (another term for
"the invisible hand"), is a made-up thing used to promote lassiez-faire
capitalism.

Supply, demand; buying and selling; contracts and agreements; imports and exports, etc., that's commerce, and no, it does not constitute any kind of "force" (nor does it include finance or the exchanges).

But what is being advocated when one argues "the market" is necessarily efficient...

I just want to be really clear. The 'market' as a force does not
exist. The 'market' as an entity does not exist. We talk about the
'market' as shorthand for talking about a system of personal decision
making in which scarcity of resources and personal valuation of goods
interact via pricing signals.

When the market 'decides' to 'punish' a company there isn't an entity
which is decreeing that something bad has occurred. What happens is
that a company becomes reliant on an inefficient good, service, process
or material and cheaper alternatives become available. In a free market,
people will tend to abandon the inefficient company because its prices
will be higher than an efficient company.

...is that it is essentially unerring. This is an argument for the essential infallibility of lassiez-faire capitalism.

If "the market" is simply the gestalt phenomenon of millions of
people making personal decisions based upon simple economic choices,
then of course this would be quite relevent:

The idea pops up in slightly different forms in parallel
computing, robotics, artificial intelligence, and evolutionary theory.
After all, evolution consists in millions of tiny, accidental mutations
that, through the inexorable force of natural selection, cause a species
to stumble towards adaptation.

But, of course the market is not random, of course it is not binary
(and neither is the government). It's ridiculous to argue that, in
real-world terms, "the market" isn't much more than humans acting as
computer switches, turning on and off in the most logical manner to
produce as efficiently as possible. Nor is it any less silly to suggest
every one of these players is subject to all the various forces that
play within the market- like supply and demand, customer satisfaction,
pricing, etc. Is that what Sebastian is suggesting, and Steve roundly
supporting?

BTW, in light of my comments about the 'market' I should mention
that 'restraining the market' is really shorthand for keeping people
from making the choices that they believe are in their best interest and
which they believe are based on their own understanding of the
individual factors which go into that decision.

I dunno. Little bit?

The question at hand is economic inequality and all that entails.
Kevin's post was spot-on, there is nothing natural or random, or
cosmically-dictated about commerce or "the market". It is a creation of
man, playing by man's rules. It was created and is maintained for one
purpose and one purpose only- to make money.

Money has been made by supplying needed goods and services, by
creating goods and services that have become needed, and by creating
demand for goods and services not needed. It's a dumb lie to suggest our
economy is the simple product of individuals supplying demand, and all
the products and services extant today are the result of nothing more
than "the market" doing its thing. That is, nothing in "the market" is a
product of anything other than "market" forces.

It would be just as stupid to suggest everything about the government is nothing more than the product of public consensus.

The food example is a terrible one, and everyone ought to stop using
it. If not for government "The Jungle" would probably read like
contemporary non-fiction. If not for government there would be far fewer
farmers in this country, "the market" choosing to go abroad for food.
There would be no inspections, no standards, nothing.

[accurate straw-man time] Now is about the time Steve or Sebastian
would start crafting their, "consumers would pick the food of the
highest quality and producers of sub-standard food would die out as more
efficient, high-quality producers took their place..." reply. To which I
would first point out that still doesn't acount for any system of
standards or accountability outside of the producers themselves, it
relies upon national-media making it a crusade, and that this country
had plenty of years operating under few regulations and no such thing
happened.

These "what the market would do" arguments (there have been many here
at Calpundit) are nothing but a bunch of would, would, woulds. They are
never did, did, dids because they're all just theory.

This is my point, once one starts to talk about "the market" as the
simple phenomenon of everyone making simple economic decisions that
inherently create maximum efficiency- and efficieny is the key to... I
dunno, blis?... they're not describing commerce, they're advocating
lassiez-faire capitalism, because commerce does not resemble that
definition.

I'm deconstructing Sebastian's comments because he's advocating theory
as truth disguised as mere observation, and that's what every free
market ideologue has become so good at doing.

In terms of society, inequality, ethics and morality, simple
observation would tell anyone looking on dispassionately that capitalism
cannot be allowed to run completely free of regulation because
capitalism is engineered only to make money, not address the ethical,
moral, spiritual, psychological, and physical needs of a society. For
chrissakes it's engineered to exploit those needs! (Adam Smith isn't
even relevent, he argued for a sort of enlightened capitalism in which
money was only a means to an end of larger goal)

So, if Sebastian is arguing the free market it inherently more
effecient at increasing profitability via efficiency or otherwise, and
as far as simple production of consumables go, usually will do so better
than any government, then I whole-heartedly agree with him. If he's
arguing that market-driven efficiency is the key to addressing societal
problems, then he deserves to get his arguments ripped apart.

He, and it seems every other person who unthinkingly screams "free
market" whenever the ills of society are discussed, are promoting a
text-book theory as, #1- observable fact, #2- a natural phenomenon; all
the while suggesting it's purpose and aim is not to make money, but
rather it must needs save society.

Like many people who don't understand why markets are good, Tim, you
confuse intentions with results (though only in such a way as to benefit
government control of individual decision making).

I never said that the market creates maximum efficiency for EVERYTHING
as you seem to imply. It tends to maximize efficiency with respect to
the wants and needs of individual actors in the economy. It also tends
to reduce the use of scarce materials while maximizing the use of
plentiful materials.

The problem is one of information. People have more information
about themselves than they do about other people. A market harnesses
the information that people have about themselves and their own
circumstances. Governments don't harness that information nearly as
well.

I have never argued that the market can take care of EVERYTHING. But
I definitely argue that many of the things that leftists want to
control, are better off with market choices--especially medical care.

I don't understand your point about created demand. So what?

Your Adam Smith point is cryptic. Have I argued that money is good
in and of itself, or have I argued that prices are a symbol by which
scarcity and valuation are communicated? I think I argued the latter.

It is fascinating that you decry freedom in buying in selling as
unable to 'address the ethical, moral, spiritual, psychological, and
physical needs of a society' while you simultaneously want to focus on
control of buying and selling to somehow fulfill those needs. Are you
some sort of fundamentalist that you want to control everything for your
vision of morality?

Also you forgot to deal with agriculture, which you claim is a horrible analogy.

#4- demand is created. Partly that has to do with the fact that the
market wastes and produces worthless crap up the ying yang. What do you
think landfills are full of? The marketplace is only efficient in the
very narrow sense of individual sector efficiency geared towards maximum
profitability. So, the "worthless crap" market might get real efficient
at producing cheap crap, but it's asinine to say that everything made
is needed or makes any economic sense to the consumer or otherwise. It
may also mean vast amounts of waste. Efficiency toward profitability can
be very, very wastefull of resources.

#5- It tends to maximize efficiency with respect to the wants and
needs of individual actors in the economy. It also tends to reduce the
use of scarce materials while maximizing the use of plentiful materials.

The problem is one of information. People have more information about
themselves than they do about other people. A market harnesses the
information that people have about themselves and their own
circumstances.

That's text-book fru-fru and is the whole point of my post, which I
don't think you read very well. All of that can be true in narrow
contexts, but you, yes you do, apply it to some huge, undefinable thing.
It's ideology to extend it beyond any particular context or say that
capitalism works that way- because it doesn't.

#6- It is fascinating that you decry freedom in buying in selling
as unable to 'address the ethical, moral, spiritual, psychological, and
physical needs of a society' while you simultaneously want to focus on
control of buying and selling to somehow fulfill those needs. Are you
some sort of fundamentalist that you want to control everything for your
vision of morality?

I didn't advocate anything remotely like what you describe. Way to go
with turning my argument into some indefensible leftist ultimatum.
Bravo. Maybe I did that a little with your comments, but gee, you seem
to put forth the same damn text-book "don't work that way in the real
world" argument every time, so please forgive me. Moi, on the other
hand, have never advocated for government the way you keep suggesting I
have.

Kevin's post was about inequity. You pipe in with "the free market
can only be more efficient because it's simply people addressing their
needs, that they know the most about, in the most efficient way". So how
am I out of line thinking that you're arguing the free market is the
cure for societal ills?

My position, just to be clear so you don't have to place idiotic
beliefs upon me, is that capitalism should be allowed to run free within
regulations designed to protect the public good, like a clean
environment, personal health, safety, etc. Basically the system we have
now, but with a few changes. I know, from being alive more than 5
minutes, that capitalism is nothing but making money and it can be used
for very ill gains. The nature of business and commerce makes it
impossible for "the public" to exert influence over most capitalist
interests, and it's asinine to suggest that capitalist concerns are
always subject to people. The government is the only body that can exert
pressure or force upon all capitalist concerns, so therefore it is the
only logical choice when it comes to addressing something harmful to the
public good. A brief look at history before the New Deal legislations
would show you that there's nothign particularly efficient about
capitalism left alone. Kevin is right, government makes capitalism
better.

I don't understand why you need to suggest I advocate "control" in
the name of morality simply because I state capitalism is not concerned
with morality. It's a simple fact and I think it's evidence of your
deeply embedded ideology that you turn every one of these questions of
inequality into some sort of binary issue.

You spout the same text-book pablum out as observable, demostrable fact; it's not and I'm calling you on it.

The market doesn't work the way you describe it, it never has, and it's a tired argument.

Again- the topic was inequality, so if you were just taking the
opportunity to advocate a free market for no other reason, it's your own
fault I assumed it was related to the topic.

A but your idealogy forces you to label the distribution of income as
'inequality' because you want to make it sound unfair. That is a
pretty semantic game, but I don't have to accept it.

You have turned my argument about how people can make decisions in a
free market society into some sort of religion. You even accuse me of
worshiping the market as a 'diety' even though I have specifically
stated that the market is merely a description have how people excercise
free choice. What is that all about?

Calling my description of the market 'text book fru fru' isn't
exactly helping me understand what is wrong with the description. Could
you clarify?

Your response beginning with 'demand is created' shows that my
fundamentalist description was not entirely off mark. You refer to the
'worthless crap market', but you fail to understand that it is worthless
IN YOUR ESTIMATION. Other people make their own choices about how
their needs and wants can be fulfilled, but because you feel the need to
condemn them and their choices. I wonder what you think about personal
choice in the context of abortion.

It is difficult for me to accept phrases like "that capitalism should
be allowed to run free within regulations designed to protect the
public good, like a clean environment, personal health, safety, etc.
Basically the system we have now, but with a few changes." because you
resist all explanation about why the market system works at all. How
can I trust people like you to deal with regulating the market, when you
don't seem to have the slightest understanding about the why it is ever
advantageous. If you can't understand why something is good, how can I
trust you to exercise good judgment about how to keep its good
qualities available to society? To put it another way, what is it about
your understanding of economics which would keep you from a command
economy. I haven't seen a single word from you above that indicates
that you understand what is bad about government control. If you can't
understand why government control is SOMETIMES bad, why should I trust
you to know how much government control would stifle our amazingly
successful economy?

The public can extert power over capitalist enterprises quite easily.
Corporations can't force you to deal with them. The government can
force you to deal with it.

The problem of inequality is trivial compared to the fact that our
economic system has made it so that even poor people can be fat with
food, have a car, a television, shelter, and clothing. I would be
willing to talk about the distribution of income with people who
evidence understanding about how the nation got to be so bountiful. I
would love to talk to Jane Galt about useful strategies to keep
corporate executives from looting corporations. But as for you, it
would seem foolish to trust you or people like you to tinker with a
system which for which you have expressed an abiding contempt, through
hundreds of words here and also at your own site
(http://www.lemmesplain.blogspot.com/).

Adam Smith isn't even relevent, he argued for a sort of
enlightened capitalism in which money was only a means to an end of
larger goal

I'm assuming this was addressed to me. This debate is going beyond
the philosophical sense I'm trying to take, but my use of Adam Smith is
relevant to what I'm saying (though in looking back at it I really
didn't explain it other than drop the reference).

I'm aware that Adam Smith advocated an "enlightened" form of free
market. I'm doing the same. And I don't think I mention money, or
profit, once in my whole spiel.

I merely equated free market with freedom, with free market being a
"description" of a system characterized by decisions of motivated
individual agents, and that this term can be used to account for various
"lenses" at modeling the world, and power relations, whether this would
be economic, political, spiritual, etc.

Remember, not even to act in one's own self-interest is necessary to
have a system which can be described as a free market. Only that
individual agents act with intention for one reason or another. The
classic description wears a view of human nature and science in which
humans act in their self-interest.

When this system becomes exceedingly about money, and power,
distortions and inequalities are sure to surface. It's not easy to tell
if this isn't actually inevitable, at least to some degree.

The constant demonization of the state, or description of it as
inefficient, however, which in our case is a democratic republic, in
which the people are sovereign, and the state itself is a meta-agent
made up of consenting individual agents, thus constituting a
manifestation of a political free market, less than hits the mark.

As Tim noted, political decisions and choices happen through the
spectrum of society, from individual and family relations to the highest
halls of government, and it is only undue impediments in this political
free market, and/or severe gaps in information resulting from secrecy
and deceit, that render the realization of this market "inefficient".

The free market can describe an existing system with different
"lenses". By focusing on commerce and exchange, one encounters the
vision of economics, and its various branches from laissez-faire
capitalism, to state capitalism, to socialism.

By focusing on a larger picture than this, on power relations and
controversial areas of life such as the commons, violence, and the
"just", we encounter the vision of politics.

However you choose to frame your analysis of the world, you can adopt
the use of "free market" thinking, and use it as an analysis of the
relative freedom of the individual agents in any system through that
frame. You selectively decide to focus on particular values, or
actions, over others. It's a tool for modeling the world, and
determining the "just" if freedom is considered an ultimate value.

Realish writes: The notion that large numbers of "dumb"--by which I
mean "having limited information"--bits can act, in aggregate, more
intelligently than one or a few central "smart" bits is not unique to
capitalism. The idea pops up in slightly different forms in parallel
computing, robotics, artificial intelligence, and evolutionary theory.

If you've ever spent any time studying distributed algorithms, you
know that it is actually exceedingly tricky to design nontrivial systems
that exhibit acceptable correctness, stability, and optimality using
independent actors with limited local information and no central
coordinating authority.

Then add in finite local computational resources, huge and systematic
asymmetries of information, and rapidly evolving behavior (people
absorb ideas about how to behave from the people around them---even when
those behaviors are stale or unvalidated, hence overproduction crises
and stock market fads). Now the purely distributed market, as a
decision-making system, looks like it could easily be subject to getting
trapped in local maxima, or to fluctuating wildly based on damaging
positive feedback cycles, or to downwardly spiraling Prisoner's Dilemma
catch-22's.

When people regard the market as a kind of Darwinism, they forget
that there's more kinds of Darwinism besides the evolution of animals.
Darwinism is simply the tautology that what survives, survives. The
result of that process differs wildly in character based on the dynamics
of the system. The proper analogy for the market may be not animal
evolution, but the weather. Sure, in the long run, climate is highly
regular, but periodically a hurricane storms through and wrecks
everything, and a butterfly in China can knock down buildings in
Florida.

So what, exactly, makes you think the dynamics of laissez-faire
markets will lead to optimal resource allocation? The statement
"independent, locally greedy actors always beats global planning" is
simply stupid; it's trivial to devise mathematical models for which this
isn't the case.

And, finally, even if markets do lead to more efficient allocation,
are the resulting sacrifices in equality and stability worth the extra
epsilon of efficiency that such a system might wring from the economy,
when compared with a modern liberal democracy plus a welfare state?

The problem of inequality is trivial compared to the fact that our
economic system has made it so that even poor people can be fat with
food, have a car, a television, shelter, and clothing.

Oh, give me a break. I suppose you think that the robber barons
willingly showered this prosperity on the working class, rather than
being dragged kicking and screaming by laws protecting organized labor
and workers' rights? Or that the American techno-industrial juggernaut
reached its present pre-eminence because of the vision of plucky small
entrepeneurs, and not the organization and muscle of the federal
government?

The United States is a mixed economy, and the high American quality
of life owes much to market intervention. Globally, the market
interventionist welfare states of Western Europe and Scandinavia have a
higher quality of life and per capita income than any others besides
America. Would you rather live in Great Britain or Chile? Germany or
Kazakhstan? It's simply moronic to point to the prosperity of the West
as evidence for the viability of libertarianism.

Excellent posts, "laughable" but I prefer the term "local minima" to
"local maxima" (even thought it's just a re-labling of the axis) because
it gives you the perfect visual of being stuck in a hole!! ;>

And sometimes the gummint needs to kick us out of the minima so that
the free market can continue down towards a lower-potential (cost)
state. A good example is how cheap US pump prices have basically driven
all serious development of motive power off-shore. Private companies
(Honda,Toyota,Bosch,Siemens) are doing the work on hybrid and
compression-engine technology, the governments just gave the whole thing
a kick with consumption taxes.

I've said before that European transportation systems and (sorry,
Sebastian) UHC are what keeps them way closer to the US in total output
despite their high taxes and labor "rigidities." (and let's not even
get into the ECB's tight money...)

To change the topic, is anybody else wondering why perfectly-informed
actor Phil wants to spend TWO extra unpaid hours each week communting?
Sticking with a 40 hour week, he's basically foregoing the equivalent
of a 5% raise, a pretty good chunk in these times. Or to put it another
way, he gives "The Man" 8 unpaid hours every 4 weeks, or about a dozen
extra days off a year !!! (depending on how many weeks of vacation he
currently gets, YMMV). Jeebus.

>>And, finally, even if markets do lead to more efficient
allocation, are the resulting sacrifices in equality and stability

Hold it right there. You listed to highly subjective individual
values - "equality and stability." Again as Brian has pointed out on his
blog, the "market" is just a descriptive term for the actions of
individual actors.

Actions that result from the values you subjectively label "equality
and stability" will be reflected in markets. Remove markets and you
simply have no rational that the resulting system really reflects
"equality and stability" of ALL individual actors, only that it reflects
YOUR perception as a central planner - which is most undemocratic.

And both are false, of course. There are governments all the way
from city councils and community councils to the Senate, theoretically
they are often manned by private citizens and not just career
politicians, and government is inherently more theoretically malleable
than any private enterprise (a private or public enterprise cannot
pursue anything outside of profitability as they only exist only to make
money, non-profits notwithstanding, but they're still all limited by
revenue. A government has the power of taxation to pursue whatever it is
allowed to pursue and the entire population of the nation is
theoretically able to effect it.).

What a load of rubbish. It is obvious that government at all levels
face informational constraints that individuals do not. (By the way,
Tim, if you think about that statement it is NOT saying that individuals
have perfect information).

Government does not know my preference ordering (to use economic
lingo), or in layman's terms they don't know what I want. They also
don't know information about me personally on many levels; whereas I do
have that information. I know my medical history much more intitmately
than any bureaucrat out there. Granted they might be able to get their
hands on much of it...but guess what that process costs resources.

Claiming my 2 points are false is just a load of wishful thinking compounded by nonsensical rhetoric.

[accurate straw-man time] Now is about the time Steve or Sebastian
would start crafting their, "consumers would pick the food of the
highest quality and producers of sub-standard food would die out as more
efficient, high-quality producers took their place..." reply. To which I
would first point out that still doesn't acount for any system of
standards or accountability outside of the producers themselves, it
relies upon national-media making it a crusade, and that this country
had plenty of years operating under few regulations and no such thing
happened.

Wrong strawman in my case. Why don't you stop being such a presumptive arrogant jackass?

The problem you highlight is one of imperfect information. That is
the firm's know about their production process while the consumer does
not. Hence it is not automatic that people are going to be selecting
the "highest quaility food products". However, it is far from clear
that decreeing standards and regulations is going to solve the problem.

One problem that is immediate is that standards and regulations can
pose a barrier to entry into a market, which ironically gets to Kevin's
first point about monopolies. Markets do not spontaneously result in
monopolies. If this claim were true we'd see more monopolies, and more
anti-trust litigation. Since we have observed neither this notion is
flat out wrong.

Barriers to entry though can move a market closer to the monopoly
outcome. That is result in fewer firms which could quite possibly lead
to price increases, economic profits for the firms, and loss of
efficiency.

I'm all in favor of the government reducing problems with imperfect
information. For example I think it is great that the Bureau of Labor
Statistics makes all of its data available for "free" (free as in you
don't have to pay for it a second time...first with taxes then later
with a seperate fee). Similarly for the Bureau of Economic Analysis. I
think this is one thing the government can and should do. Help make
information easier to obtain.

In terms of society, inequality, ethics and morality, simple
observation would tell anyone looking on dispassionately that capitalism
cannot be allowed to run completely free of regulation because
capitalism is engineered only to make money, not address the ethical,
moral, spiritual, psychological, and physical needs of a society. For
chrissakes it's engineered to exploit those needs! (Adam Smith isn't
even relevent, he argued for a sort of enlightened capitalism in which
money was only a means to an end of larger goal)

Another strawman for Tim King of Illogic. Where have I said that
there is no role for government? Answer: nowhere. So next time you
decide to put words in my mouth perhaps you should do a modicum of
checking to make sure you are on solid ground instead of some vapid
fantasy you are having.

Yes, the market screws up. Economic theory says there are ways to
solve these problems. Problem is Tim, these solutions are just as much
theory as the theory spouted by the "free market types" (by the way Tim,
I rarely use the term "free market"). So your complaint about the free
market ideologues is also a complaint against you.

I agree with Kevin's overall point. Sometimes the government has to
step in. However, this should be done very, very carefully and with
considerable thought. But this is not how government typically
operates. Government is run mainly by politicians who do things to get
re-elected and by bureaucrats who can't be fired or punished in any
meaningful manner. So the solutions are usually half-baked.

The idea that interventions are typically good makes things better is
pure crap. Look at the California energy crisis. Price caps were
removed in the wholesale market and a bad situation went to complete
shit in a few months. Who removed the price caps? Not the suppliers.
Not the consumers. Go ahead guess.

Now, on the flip side, eventually government intervened again (to fix
its earlier fuck up) and managed to do something right (soft price caps
that depended on the least efficient [i.e., most costly] producer).
Once that policy was in place the high prices plummeted.

The obvious solution for the state government was to remove the
retail rate cap, but this was seen by Davis as politically bad so he
didn't do it; even though he knew it would help solve the problem. By
the way, I supose you don't see how it could help, so I'll explain it to
you, Tim. Removing the price cap would have introduced a demand
response from the final consumers thus constrainng the price setting
power of the generators. This would have brought prices down and
limited the damage that was done. Instead the retail rate freeze was
kept in place thus making the demand curve inelastic (unresponsive to
price since the final consumer saw a price that was lower than the price
in the wholesale market) allowing the generators to drive prices as
high as $1,600 a MW in some hours (by the way for the typical
residential consumer in CA that translates into an $800 monthly bill if
the price remained that high in all hours, instead consumers saw their
typical $50-$60 bills...so why cut back?).

And let me flagellate this horse caracass a bit more. Who designed
the "deregulated" market in CA? Answer: Industry and Government and
Consumer Groups. Guess what, this product of intervention was a
nightmare. It was bad from the get go (check out some of Paul Joskow's
work on this). You know what was one stupid blunder early on? There
were no simulations of the market design. In fact, such an idea was
proposed and shot down. Now maybe simulations wouldn't have caught the
problems...but maybe they would have. This "designed" market was
seriously screwed up to start with. It handed market power to the
generators on a silver platter.

Anyways, I'm done in this thread. I know I am not going to convince
you that intervention is more often bad than good. You have managed to
develop quite a little house of straw with your "deconstructing", and
next time try reading and responding to what people write...not what you
think they have written.

For my final point, I think there is a role for government and
intervention. The problem is that there is a total lack of appreciation
for unintended consequences, the complexity of many [most] markets, the
vast amounts of information necessary for making good decisions, and
the nature of governmet itself.

I don't care what you think of me or if you trust me or anything
else. I don't need to show you, tell you, explain to you anything
outside of what's needed to continue any one particular debate.

but your idealogy forces you to label the distribution of income
as 'inequality' because you want to make it sound unfair. That is a
pretty semantic game, but I don't have to accept it.

I didn't do this. Stop putting words in my mouth. You're not a very honest debator, you know that?

Allow me to explain, plainly, again:

Kevin's post was about inequality. You pipe in with the same tired
crap you always do. I assume you're addressing the subject of inequality
and advocating the idea that inequality is not a problem in, or can be
fixed by, lassiez-faire economics. So, I argued you were mistaken. If
you weren't doing this then I don't understand why you had to pipe in at
all.

But as for you, it would seem foolish to trust you or people like
you to tinker with a system which for which you have expressed an
abiding contempt, through hundreds of words here and also at your own
site (http://www.lemmesplain.blogspot.com/).

Thanks for the plug.

But, "trust people like me"? Your juxtposition suggests you are
somehow embroiled in the decision-making that goes into shaping the
markets, i.e., who are you to be dispensing trust? And what's more, who
are "people like me"?

And, you see, I do not have unbridled contempt for commerce or
industry or the exchanges or anything like that (I'm a licensed broker,
for chrissakes), I have no patience for ideologues such as yourself. You
need to internalize my arguments more. They're not directed at "free
markets", they're directed at you.

I have no patience for you because, #1, everything you say is so
woefully predictable it really doesn't surprise me you've read every NRO
cover to cover for the last decade, and #2, you're an intellectually
dishonest debator. Those arguments you don't run away from you don't
argue honestly:

If you can't understand why government control is SOMETIMES bad,
why should I trust you to know how much government control would stifle
our amazingly successful economy?

(again, that bizarre "trust" thing) What would make you think I don't
understand government control can be a bad thing? Have I been praising
the former Soviet Union. Have I held up government cheese as the finest
cheese ever produced? Your views on the free market have never been
subtle, not in these forums, they've been essentially binary. While the
only reason you might have to think I'm some sort of communist is the
fact that I haven't explained all of my beliefs in detail (omission),
you have seemingly advocated lassiez-faire economics every chance you're
gotten.

So, again, pardon me for assuming in a thread discussing inequality
you were advocating the same thing you seem to advocate every time the
topic comes up.

You refer to the 'worthless crap market', but you fail to
understand that it is worthless IN YOUR ESTIMATION. Other people make
their own choices about how their needs and wants can be fulfilled, but
because you feel the need to condemn them and their choices. I wonder
what you think about personal choice in the context of abortion.

Are you a machine? Do you speak in binary or something? Or do you
just have a complete lack of imagination? The point (good lord, maybe
you're just not very bright) was your free market theory does not
account for things like waste = profitability, or people making
decisions that make absolutely no economic sense. I am fully aware that a
chia pet, though crap to me, makes a perfect gift for others. Pure
market theory simply does not account for non-economic decisions- and
the theory as you describe it is nothing more than pure theory. If
you concede crap makes good gifts, then you should take another step and
realize other things like sometimes waste=profitability, players do not
have near omniscient knowledge and therefore inefficiency can be
rewarded, resources can be depleted, and most corporations are not
subject to public will. Take that step and maybe you'll take the
next step to understand how dependant the success of US markets has been
on government.

Calling my description of the market 'text book fru fru' isn't
exactly helping me understand what is wrong with the description. Could
you clarify?

I've already explained this clearly. This is my last post to you
because you either don't read my responses or just don't bother to
attempt to understand them.

Your description of the markets is how markets work in theory. It's
asinine to suggest, as you do, that that's how the markets actually, and
usually, and necessarily, must work. This is why I have no patience for
ideologues. Theoretically we should have completely free markets. If
they worked as they do in theory there would be no better system for the
allocation of goods. Theory demands every actor only acts as some sort
of logic calculator, not only that every actor must also be part of the
system. It's nothing but theory and falls apart completely the moment it
hits the real world. Again, read a little about the years before the
great depression and the new deal legislation. The markets were much
more "free". It didn't work like the theory would suggest it would.

I understand how and why markets are benificial, but I also understand
that there is no such thing as a free market as you have described,
numerous times, in your theories. I also understand how much the success
of the US markets is owed to our government.

You seem to be completely and utterly ignorant of that fact. You seem to
have the idea that our markets are as strong as they are because our
system is so much more free of government influence than others around
the world, or something. You're unable to make any distiction between
"control" (ex. centralized food production) and "regulation" (ex.
quality standards, environmental standards, inspections, etc.) That
leaves out 200 years of history in which our government hasn't really
done much more than create and maintain institutions specifically
designed to facilitate commerce.

The markets aren't strong because of lack of government, they're strong because
of government. You're ideas on government and markets are pretty
simplistic. You boil everything down to "control", government in the
markets is only conceived as some sort of "control", and that's pretty
infantile.

I've never advocated government control of anyything. I've stated that
observation and history tells us that capitalism cannot operate without
government regulation and you turn that into a call for "control" for
morality, or whatever.

See, I got on you because (in the context of the thread) you seemed to
be piping in with the free markets save all argument. Perhaps I was
mistaken, but everything you've written since has suggested that is in
fact what you believe. You've stated you don't, but then you come back
to defend pure theory once again (The public can extert power over
capitalist enterprises quite easily. Corporations can't force you to
deal with them. The government can force you to deal with it. / It also
tends to reduce the use of scarce materials while maximizing the use of
plentiful materials. /What happens is that a company becomes reliant on
an inefficient good, service, process or material and cheaper
alternatives become available. In a free market, people will tend to
abandon the inefficient company because its prices will be higher than
an efficient company.).

You're arguing is so typical "online fundamentalist", I have to
restate everything over and over again because you keep misrepresenting
my arguments. I'm calling you on this: your advocacy of free market
theory as reality.

Your theory doesn't resemble the real world and it never has. Market
idelogues always take this tack because then they can claim that the
only reason things aren't better is because of government "control" over
markets. You're ignoring history and observation. Your theory is not
fact, never has been and never will be.

Freelixer- Well, I wasn't responding to the idea you brought up so much
as the example of Smith within the context of free markets solving all
ills.

What a load of rubbish. It is obvious that government at all
levels face informational constraints that individuals do not. (By the
way, Tim, if you think about that statement it is NOT saying that
individuals have perfect information).

I know I am not going to convince you that intervention is more often bad than good.

I was arguing more Sebastian than you. I probably should have left
your comments out and not even addressed you as I couldn't seperate the
two and make the same argument. It was weak rhetoric on my part, so I'm
not going to bother to reply any further. Also, I just don't care to
argue whatever it is you're arguing.

The free market theory is absolutely correct as a theory. If one
takes those "tends to" literally, and is able to understand that it's
still just a micro-theory (it only really applies to pure production,
and that's about it), then Sebastian's description is accurate.

What I'm obsessively railing against is the projection of this micro-theory onto the macro world. It simply doesn't apply to so much of what it is advocated for, and simply does not apply to just about every social issue out there.

It's a consumer goods and services theory and that's it. I'm sick of
it being touted as a natural process that can be applied to every
conceivable ploblem under the sun.

Tim, you are absolutely correct that I combine your rhetoric about
regulation with an suspicion that you are really advocating control.
However I haven't been rhetorically hiding that fact, I have been
highlighting it because you don't offer useful distinctions between the
two. You merely assert that they are different. I believe that they can be different, but I'm not at all convinced that in your hands they are different.

My problem is that neither you, nor Kevin, nor in fact any other
person on this board has chosen to even sketch an outline of your
conception of how one might determine when there was too much government
regulation. You agree that government CONTROL is damaging. I
highlight the problem of CONTROL because you refuse to define the amount
or type of regulation which would lead to CONTROL.

You whine that I do not engage your arguments, but your arguments
consist of very little more than accusing me of being some sort of
religious zealot of the free-market. If I may quote you: "Why are
market worshipers incapable of seeing the same falacies in their own
ideology?";
"'free market' altar"; "You're arguing is so typical 'online
fundamentalist'". I really can't be blamed for not following your
argument when it is so well hidden in personal abuse.

You force me to extrapolate your arguments, because you spend pages
of text calling me an idiot, when your typical response to anything I
say is: "You spout the same text-book pablum out as observable,
demostrable fact". You use one line throwaways like "If not for
government "The Jungle" would probably read like contemporary
non-fiction." as 'explanations' interspersed between whining about my
mental faculties. I'm also a bit confused about your understanding that
I think the markets are always better everything. My very first post
says: "In my mind the burden of proof should be on the government
regulator to show that both a) has been a market failure AND b) that the
government is likely to correct that failure with introducing all sorts
of other bad results into the system. Doesn't talk of the burden of
proof suggest to you that I am open to the idea that regulation isn't
always bad?
The record is in the posts above. I stand by my attempts to engage you, and others can judge it as they will.

Speaking to the others, is there some sort of definite principle
which lets liberals know when there is too much regulation? I know I
get in trouble for anticipating, but if there is, it really ought to be
more definitive than: "There is too much regulation when it overly
interferes with the markets ability to produce..." or some such
formulation which merely moves the 'too much' from one clause to
another.

There's no pat answer to "how much is too much". First of all, how is
the problem in any one industry or business determined to be
government? I've no doubt there are businesses out there that would be
profitable if it weren't for taxes, or having to have insurance, etc.
One could look at that and say "the government is to blame", or one
could look at it and say, "the company doesn't have a sound business
plan. They must pay taxes, they must have insurance- that is the context
in which the company must operate".

How far can blaming the government go? If a chemical manufacturer
can't maintain profitability because it can't get rid of its industrial
waste efficiently, should the government allow it to dump wherever it
wants?

The question that has to be answered is to what end is regulation used? Just because someone could
make a living doing something- if only there weren't this and that
governmental regulation- does not mean there's any worth to that
something. Profitability and business are not ends that justify means.
There's no reason whatsoever to believe any profitable business venture
is a good thing.

It doesn't matter if wealth is created, if jobs are created, if
there's a market for it, what matters is: does the capitalist venture
fit into the context the people (government) have created?

If yes, and it's clearly some sorts of regulation that make it
difficult to have a working business model, then it may be too
regulated.

If no, then the regulations are fine.

What do I mean by context? Society, the social contract. For
instance, if a society determines that it must have clean air and clean
water, then any business within that society must operate within those
parameters, that context. If a business cannot be profitable because it
spends too money much trying to stay within those parameters, then it's
not a viable business. Simple as that.

Now, if the business is necessary, absolutely necesary, and no one
who's tried to run a similar business has been able to succeed, then of
course there is a need to modify the regulations, or another solution
would be something like subsidies- the government subsidizing the
business so it can meet the societal demands and still be viable.

What is wrong with the "free market" mantra is that business is being
put head and shoulders above the social contract. Rather than look at
public opinion, needs and wants, and intact legislation and saying,
"society has determined they want clean air and water, so therefore any
business venture we undertake that must be taken into account",
free-market ideologues look at society and say "all those regulations
are just keeping us from making more money in more ways".

It's the government's job to enforce, codify, and maintain the social
contract. Business is subserviant to the people. I don't care what the
argument is, people, society, always comes before profits, and commerce
operates at the whim of the people, not the other way around. That is
not any sort of advocation for socialism or communism or anything else
like that, it's simple fact: people make up everything in society and
civilization, including business, it doesn't make sense to value the
creations of man above man.

So when is too much regulation too much? It depends on a lot of
things, but most simply on what the social context is. If a whole
industry has trouble maintaining itself due to (assuming it's been
determined) regulation, then certainly it needs to be looked into. If a
few businesses out of many that provide the same goods or services are
not viable and it's blamed upon regulation, it's more likely that they
don't have a good business model.

See, I don't think the government has to control much of anything
when it comes to commerce. I think government has to set up the contexts
within which commerce commences. That's what it has been doing for
decades, prior to the 60s and 70s it actively helped business more than
impeding it. since the 70s, what conservatives call control, or
overregulation, or impediment, I call a redefinition of the social
contract.

The context in which business did business was, for a long time, "rape,
pillage, and exploit." Toxic waste dumped in public waterways and
billowing into the sky, indentured-servant level wages, the exploitation
of children, the wholesale destruction of entire habitats, ecosystems
and species... all of it was OK because the government allowed it to
take place. "The Jungle" is very apt. No one in their right mind would
consider the meat houses of chicago at the turn of the century to make
more sense than what we have today.

The context is changing for a few reasons, not the least of which is
the fact that that kind of pillage and exploit economy cannot be
maintained. Also, people are valuing wild lands, a clean environment,
ethical business and labor practices much more than ever before.

It's not government's job to make sure as many people as possible can
run a viable business, it's government's job to define the context of
our society. If a business cannot survive in a new context, then tough-
that's the price of doing business in a liberal democracy.

Speaking to the others, is there some sort of definite principle
which lets liberals know when there is too much regulation? I know I get
in trouble for anticipating, but if there is, it really ought to be
more definitive than: "There is too much regulation when it overly
interferes with the markets ability to produce..." or some such
formulation which merely moves the 'too much' from one clause to
another.

Of course there isn't. It's not that simple. In my opinion, it's
even naive to only think of free markets in terms of economics. If you
do so, then you can get locked in rhetorical battle for hours without
realizing that the box you're in is unrealistic anyhow.

As Tim noted, political decisions and choices happen through the
spectrum of society, from individual and family relations to the highest
halls of government, and it is only undue impediments in this political
free market, and/or severe gaps in information resulting from secrecy
and deceit, that render the realization of this market "inefficient".

What we really have in America is a tension between the values that
would drive a free market, and how would you choose to measure its
effect. If you are thinking economically, and interested primarily with
economic exchange, then you have a particular lens for viewing the
issue. If you are thinking politically, and interested primarily in
political rights and justice doctrine, then you have a different lens.

There is an inherent tension between these two conceptions, and it's
always the economic free marketeers who are not owning up to reality and
democracy. If we free up inefficiencies in the full spectrum of the
political market, and allow greater and more timely flow of information,
then politics would be much more responsive.

If it was, then it would compete better in terms of efficiency with
economic free markets, for no reason other than that the two systems are
not ultimately logically different. Each rests in individual agents
pursuing their free motivations, framed by (deemed) inviolate values and
measures, with timely access to information and with undue contraints
from other agents minimized.

No matter the efficiency of either market, political or economic, you
will have a tension between the two, as there is a tension of values
and measuring of ends. In America, there is no question that the
political free market comes first, that political values come first,
that "all men are created equal", and so on through the Constitution,
and that economics must play by these rules.

So all of you economic libertarians out there are in many ways
wasting your time, and cherry picking, by always emphasizing freeing up
economic markets while criticizing tied up political markets as being
interferers and incompetents.

If you cared so much of logic and reason, and efficiency and freedom,
then you would be championing ever more loudly the freeing up of
political markets, and the greater distribution of timely and relevant
information. Not to mention increased and simpler access to politics,
from neighborhood to Congress, and assuring the education of an
enlightened citizenry.

For the economic free market only comes after that, on the foundation
of our American constitutional republic. The fact that there is
capitalism elsewhere in the world absent of democracy is not my concern.
In fact, I would argue that no free market can be possible in China,
for instance, or is a myth, in the absence of at least a functional form
of free political market.

Read up on liberalist democratic theory, the Declaration of
Independence, and the Constitution. These are our primary values. The
bedrock. From them, we encourage the freest economic market possible,
because it works, and because it's consistent with our values of freedom
from undue interference. Without freedom and democracy, which is a
manifestation of a political free market, there would be no economic
free market to speak of, it would be just an illusion.

Wow Tim, it is amazing how much further along we could have been if you had started with the above post.

With caveats, I'm very willing to agree with the framework you lay
out, though I'm certain we would disagree on some of the details.

One of the key insights you bring to the table is that the government
sets the context of how business is carried out. I agree. The
government appropriately sets limits on child labor, external waste,
minimum safety standards, etc. When it does such things well, it allows
community input and balances sets of needs against each other.

In practice, this process sometimes breaks down. I think that there
are at least 4 major factors which cause government agencies to run
amok:
1) Agencies seek to expand their area of influence often because they
have been largely successful in their areas of core competence or
because they have outlasted their purpose. This also applies to such
'temporary' measures as NYC rent control or Lake Tahoe temporary
building moritoria. They often do so with very little accountability to
the democratic process, and thus subvert the social contract.
2) Some targeted programs gain their own constituencies. These
programs generally harm most people a little bit, and help out the elite
constituencies a lot. This subverts the social contract by taking
advantage of the fact that if the harm can be spread out over a long
enough period of time, or over enough citizens that only the benefactors
will care enough to vote on the issue. Farm subsidies and corporate
welfare are examples of this. I might argue that the interface between
drug laws and police departments operates partly within this problem.
3) Agencies and governmental decisions often develop a hyper-narrow
focus which makes it difficult to analyze the trade-offs which are
necessary for a functioning social contract. I think that the EPA
cyanide rules are an excellent example of this. For hundreds of
millions of dollars we are implementing changes which might save 2-3
people per decade. There are probably hundreds of projects that could
save more people for much less money, but the EPA has its purview and it
doesn't see beyond it.
4) The majority sometimes gets swept away in moralizing, and makes decisions without investigating the trade-offs involved.
Analysis of the detrimental effects of drug prohibition may, until recently, have suffered from this problem.

The major advantage that market systems have over governmental
systems is found when things go wrong (which unfortunately is al too
often). When companies introduce massive inefficiencies, they are
driven into bankruptcy. When the government falls into the above traps,
it often takes decades to correct the problems. That is why I tend to
resist government solutions--if the solution is wrong it takes just
under forever to correct it. I would love it if there were a system for
looking at individual government programs and honestly evaluating how
they are working. Generally there isn't.

Bringing it all back around to income distribution (I bet you thought
I had forgotten) I think it is important to acknowledge that the market
provides a number of excellent signalling tools which encourage people
to work. Employing people, is one of the things which are economy does
quite well. This employment has created a situation where even the very
poor in our nation are quite rich compared to the impoverished natural
state of the world. I believe that wholesale wealth redistribution on
the stated basis of 'equality' could risk that.

I don't like the fact that many who are willing to risk the concrete
gains of the market system for the ephemeral gains of equality seem to
assume that those market gains belong to them by right. Many leftists
want to assume a productive economy and work from there--heedless to the
fact that their tinkering risks the assumed state. It is perhaps the
same mistake that some conservatives make in reverse about race. They
want to assume a color-blind state, but their actions based on that
assumption may make a racially blind society even more difficult to
achieve.

I think freelixer's post does better than I in fleshing out the idea further.

Everything you state is true in one context or another, and
everything could be matched with an equal observation from the private
sector. One big one would be the ability ans want of the private sector
to hold jobs as hostages in influencing government. Large corporations
suffer from the exact same disabilities of government that you describe.
Whole industries can suffer from the exact same things as well.

I think freelixer really puts her/his finger on it, if the complaint
is inefficient government, why not work toward making government more
efficient?

No one disagrees that government can be bloated and inefficient, I
think it's much more realistic to think government will have to be with
us forever and it is simply the only body that can protect and maintain
the public trust- no one else has the power, anyone else given the power
would not be subject to the will of the nation as government should be.
Business comes and goes, and it's a testament to the power of industry
and commerce and the government within which they operate that in
liberal democracies business continues to thrive, no matter what the
social contract.

I agree that most of the problems which I outlined exist in the
private sphere, but the problem is one of correction. The private
sphere corrects many of these problems when a competitor who is not
hampered by the problems makes other companies uncompetitive. The
government has no competition, and in many cases outlaws its
competition, so its problems tend to be far more difficult to correct.
See for instance public schools. Whatever you want to say about private
schools, you can't claim that a private school which didn't educate
would continue to exist for 50 years.

As for making government more efficient, I'm all for it. I don't
believe that I'll be able to help get rid of nearly as much government
as I like, so I want to make it more efficient. Do you have ideas that
might help deal with the 4 problems I outline?

It's odd Sebastian that you keep speaking of the state and government
as one so alien to ours. Government for the people, by the people, of
the people is what we have. No corporation runs like that. Thus, they
must compete.

Our government embraces competition within its organization, in its
very precepts, foundations, and processes. If there is a free flow of
information, and the whole spectrum of governance is operating
efficiently and with full participation, then a government that is not
somehow doing its job will be replaced before you know it.

Competition is everywhere, even amongst employees inside a
corporation, in terms of doing your job. The same within government if
we champion getting rid of cronyism, secrecy, corruption and deceit. To
do this, we need to fight for the freedom of information.

Along with that, we need to keep focusing on our form of government,
on our state, and stop characterizing it as something else, something
dark, something tyrannical. To be frank, it's BS. This is America, and
we have a free government, though granted one in which the free market,
and information access, is distorted.

As for competition from other states, this is something libertarians
should think about. Their theory does seem to imply free immigration,
and if this was actually allowed, then the competition between free
states as you describe would indeed occur.

Not that I advocate that, and I am not a real libertarian for that
matter either. I believe the political free market comes first, and the
buck stops with self-government and the Constitution. Competition
takes place within, in terms of political efficiency, though we need to
be sure our foreign policy is also carried out in an enlightened manner
that emphasizes and gives an example of our dearest values. Why?
Because is shows we mean what we say, what we preach, in the Declaration
of Independence, and that we have integrity, honor, and consistency.